BOP insurance 101

consultant and small business owner

As a small business owner, you’ve got a million concerns keeping you up at night—liability protection shouldn’t be one of them. That’s where BOP insurance comes in. Short for business owners policy (BOP), BOP insurance is a packaged liability coverage policy that’s purposefully made with small- to medium-sized businesses in mind. Its job? To protect business owners from the many risks any company faces on an everyday basis.

But what does a standard BOP include, and what are its coverage limits? Let’s find out.

What is BOP insurance?

Similar to a homeowner’s insurance policy, a BOP, insurance for business owners, combines several layers of different coverages in order to protect a business from multiple liability angles. Typically, insurance carriers bundle basic insurance coverages into a BOP and then sell them at a higher premium. The most common BOP can protect small business owners against four main circumstances:

  • Property damage
  • Liability
  • Peril
  • Business interruptions

Although policies vary, most also allow the business owners to opt-in for additional coverage options, like:

  • Commercial crime
  • Electronic data loss
  • Insurance for fire and business interruptions
  • Forgery
  • Fidelity
  • Hired or non-owned vehicle liability
  • Merchandise spoilage

Requirements to qualify for a business owner policy

Not all businesses are eligible for BOP insurance. And, while eligibility requirements differ for each insurance agency, (typically) it’s meant for businesses with a small footprint that exist in low-risk industries. Requirements often depend upon the business’ location, the size of the office, the amount of revenue annually, and the industry the company operates in. Common eligibility requirements might include:

  • All business occurs on-premise
  • Has 100 employees or less
  • Has an office that’s no larger than six stories of 100,000 square feet
  • Requires less than 12 months of business interruption insurance
  • Operates in a low-risk industry
  • Makes less than $1 million in annual revenue

What kind of business would qualify for a BOP?

In most cases, a BOP would include office-based businesses, apartment buildings, retail stores, and small restaurants and cafes.

There are also some exceptions made when it comes to on-premise activities. For example, small contractors that perform residential construction, landscape, carpentry, or drywall may be eligible for a business owners policy.

What does BOP insurance contain?

BOP policies vary from insurer to insurer and can be altered to fit your specific business. However, your standard policy would (at the very least) include a bundle of:

  1. General liability insurance
  2. Commercial property insurance
  3. Business interruption insurance

#1: General liability insurance

Every business needs some form of general liability insurance policy. It’s insurance for business owners that helps mitigate personal and business risk and reduce liability exposure (whether or not you’re at fault). In most cases, insurance coverage extends to general claims that involve bodily injury or property damage to a third party, caused by the services the business was offering.

What does it cover?

While it depends on the insurer, (typically) it will include protection from third-party:

  • Bodily injury
  • Property damage
  • Medical bills
  • Legal fees

For instance, if a client was visiting your office, there are many accidents that could happen. Should they slip and fall on a box that’s in a walkway or hurt themselves on a tool that’s been left lying around, you could be held liable. Or, if you go work at a client’s home, then the possibility of damaging their property comes into play.

General liability insurance could help cover the costs of a client’s medical expenses or the damages to their property, and pay for the legal team you might need to defend yourself in court (if it comes to that).

#2: Commercial property insurance

In most cases, commercial property insurance is not required by law. However, it’s recommended for most business operations. It can protect both your physical assets and the building itself.

This type of insurance is also sometimes available as “named-peril coverage.” Under that form of commercial property insurance, coverage is only provided for damage caused to listed events. Commonly, this includes:

  • Fire
  • Vandalism
  • Smoke damage
  • Wind damage

Major disasters—such as earthquakes, floods, avalanches, or tornados—also known as “acts of God,” aren’t included. For these events, you would have to purchase additional property coverage. Some insurers offer “all-risk” coverage, which offers more comprehensive protection at a higher price.

What does commercial property insurance cover?

  • The building itself
  • Inventory
  • Furniture
  • Equipment
  • Fence and landscaping
  • Critical documents
  • Computers and devices
  • Exterior signs
  • Third-party property

Factors that determine the cost of the premium are based on your property’s risk profile. This includes the location, construction, occupancy, and should you need it, fire and theft protection.

#3: Business interruption insurance

Depending upon the insurance agency, business interruption insurance may be included as a subsection of the commercial property insurance (or as its own entity within the greater BOP policy).

Business interruption could cover the financial loss caused by a fire or disaster that disrupts the company’s ability to operate and generate income. So, if all of your critical equipment were to be stolen, the loss of income caused by the operations delay could be covered.

Or, were a fire to destroy the building, this type of policy could help cover the expenses of operating out of a temporary location.

BOP & business insurance: the coverage you need

Basically, BOP doesn’t cover you from everything.

For instance, it wouldn’t cover you from liability tied to bad advice or negligence resulting in a client’s financial loss. To protect yourself from these mishaps, you’d need professional liability insurance, also known as errors and omissions insurance (E&O).

With Thimble, you can buy general liability insurance and professional liability insurance policies by the hour, day, week, or month. It’s insurance coverage that works when you do.

Starting as low as $5 per hour, insurance has never been as affordable or easy to purchase. To open new doors, just download the Thimble app or click “Get a quote.” In less than 60 seconds, you can go from no coverage to having a Certificate of Insurance in your or your client’s email inbox.

Get covered and start saving today so that your small business is protected from all the ups, downs, twists and turns. That’s Thimble—your small business safeguard.

Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.

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